Legal Eye: Recommended New Year's resolutions for the Polish government

In light of this, we would like to recommend a few New Year's resolutions to the Polish government.

Implement one-stop registration

One-stop registration for all paperwork to start a business in Poland is a favorite sound-bite with each administration. We'd really like some movement from plans toward implementation. At this point, it still takes weeks to even register a corporation in Poland. And, worse yet, various registration courts are becoming creative in thinking up additional documents needed just to form a company. We really dislike trying to explain this to our clients.

There is a long history on this project. In 2004 the Law on Freedom to Conduct Business Activities was adopted, but with a catch. The key provisions on easing the paperwork for starting and maintaining a company were not to come into effect until January 1, 2007. In 2006, this date was pushed up to October 1, 2008. Earlier in 2007 the former government proudly unveiled the Kluska plan, which included revisions to the Law. The Kluska plan fell by the wayside with the new elections.

Recently, the new government announced its intention to form a new "Friendly State" extraordinary parliamentary committee to diagnose and find solutions to the overly-bureaucratic public sphere. Within all this, legislative changes to ease doing business are to be addressed. We suggest something more specific than just another delay in implementation.

Make public-private partnerships easier

Public-private partnership is one of those sensible ideas, especially in light of the large infrastructure projects needed for Poland to host the 2012 European soccer championships. However, the procedures for entering into a public-private partnership are unwieldy and complex at best. This is a sure cocktail for disputes to arise, and Polish courts are notoriously slow. If nothing else, dispute resolution should be put on a rocket docket.

Equally important, though, is the government's attitude toward working with business. If any contact with business is viewed as suspicious and a likely source of corruption, the naturally reticent nature of bureaucracy will ensure that no public-private partnership is feasible. We recommend that the new government puts into action its avowed pro-business attitude.

Lay off the retailers

In 2007 a new law burdened retailers with another layer of bureaucracy to develop retail space in Poland. Under this law a retailer must obtain permission from local officials to construct a store with a sales area of larger than 400 sqm. This is in addition to first securing the proper zoning plan and building permits. The criteria by which local officials are supposed to judge each project is, to the say the least, vague. While this additional layer of bureaucracy may have appeased the former government's coalition partners, it makes little economic sense. We suggest repealing this law.

Stop losing out on "free" money

During the two-year period ending December 31, 2006, Poland received nearly zł.49 billion in funding from the European Union. In 2006 alone Poland received zł.11 billion more from the European Union than it paid in. While the flow is positive, Poland has not absorbed the structural funds well. In fact, the amount of available funding actually drawn upon by Poland in this period amounted to less than 60 percent of the total amount budgeted. Presumably, Poland improved its rate of absorption in 2007 (the statistics have not yet been released), but we doubt it reached 100 percent. If Poland continues to under-utilize the funding available, the EU may very well reduce the amount of funding earmarked for Poland in the next round of budgeting for 2008-2013. We suggest that the new government quickly identifies where the shortfalls lie and takes corrective action to ensure that Poland uses all funding from the EU.

Set a date to adopt the euro

The previous government refused to set a target date to adopt the euro, although Poland joined the Economic and Monetary Union upon EU accession on May 1, 2004. Granted, active participation in the euro zone was suspended at the same time Poland signed the Treaty of Accession. Nevertheless, Poland was and is obligated to work toward adoption of the euro. All other new member states have either announced a target date to adopt the euro or have in fact already entered the euro zone. Most recently, Malta and Cyprus joined the euro zone on January 1, 2008. Hungary and the Czech Republic have announced target dates in 2010 to adopt the euro. Even Romania, which joined the EU nearly three years after Poland, has set a target date to join the euro zone by 2014. We recommend that the new government set a target date to adopt the euro, and more importantly, start working on the fiscal and macroeconomic reforms necessary to enter the euro zone.

Judith Gliniecki is Of Counsel to Wierzbowski Eversheds

judith.gliniecki@wierzbowski.pl

Paul Fogo is a senior attorney with Miller Canfield

fogo@pl.millercanfield.com